Crypto-currencies and the blockbuster technology behind it: The Blockchain. As the game's rules are re-written, how should states, companies, and individuals get involved in blockchain? In an interview with Derin Ekonomi magazine, Dr. Jonathan Reichental, the Chief Information Officer of Palo Alto, the city home to the Silicon Valley elaborated on these subjects.
Blockchain is a technology that can authenticate identity and form verifiable transaction histories as well as decrease transaction overheads by cutting down on costs at an increased speed. Blockchain may also streamline processes by enabling organization entities to operate without a central authority.
Chosen as one of the top 20 most influential CIOs of Silicon Valley and the U.S., Dr. Reichental gives clear cut speeches and seminars on smart cities, digital cities and blockchain issues on platforms such as TEDx and Lynda. He also has a blog, Reichental.com.
How can companies adapt their businesses to the blockchain model? In the near future, do you expect big company crashes because they couldn’t challenge ‘blockchain competitors’?
I think it’s too soon for any type of adaptation from existing enterprises. We’re in the early learning and experimentation phase. For sure there are some solutions already and the start-up community in particular is active. But it’s really early. It’s important for enterprises to constantly monitor technological advances and for them to explore and understand impacts to their industry. There are some industries that have potential for disruption earlier than others such as those in finance. Doing nothing is not a good strategy. But equally, making major strategic choices based on a speculative technology at best, is not a great idea too. In the second part of your question, I don’t anticipate any big company crashes in the near future. Long term is a different story though!
How will states, financial companies, banks, and institutions like FED and IMF react to blockchain based cryptocurrencies when they understand the transformative power of blockchain? What do you think about this zerohedge post?
It looks like financial entities are fully engaged in the cryptocurrency debate, with many undertaking significant research and development. Cryptocurrency has the potential to threaten existing financial mechanisms, but could also, under certain circumstances, it could complement or evolve existing processes. Financial organizations must fully understand the scope of impact. That’s why they are deep into this now. The consequences of the disruptive nature of cryptocurrency depends on where you are in the money ecosystem. For example, do you set policy? Are you a customer? Are you a provider?
We live in an increasingly digital and global world. The advantages of technology also enables bad people to do bad things. Public safety requires us to understand these threats. Without that, we are vulnerable. This is the 21st century reality. I understand the motivation for the proposed legislation in the ZeroHedge post. I just hope our efforts don’t compromise the entirety of our privacy or the important checks and balances of freedom and democracy.
Governments collect most of the tax from transactions that occur in the financial sector. Who will pay the tax if everyone switches to cryptocurrency? Is it possible for governments to collect tax on a blockchain-based economy?
It’s too early to tell where this is headed. We must accept that change is constant. Our societies continue to evolve. What was standard years ago is no longer. When cars arrived, horse transportation was impacted and largely eliminated. When the Web emerged, newspapers lost their dominance and now struggle to survive. No doubt cryptocurrency will begin to impact the financial status quo. We’ll change again. What is not understood right now is the magnitude of any change and how we might respond to it.
Can Artificial Intelligence cheat blockchain? Is it possible to create fake databases and cheat the blockchain ledger? Does the public ledger system have just enough for ultimate security of the blockchain?
We don’t know the full implications of Artificial Intelligence (AI) yet. There is a lot to be excited about and an equal amount to be concerned about. It will take us to new places and we will need to confront new challenges. When I think about vulnerabilities to blockchain, I recognize that it is an emerging and evolving technology. It’s bound to have issues. That’s a given. Anyone dabbling in this technology needs to consider this as they pursue experimentation and eventually fully functional solutions. Finally, no technology is fully secure. That’s life.